Hitchhiker’s Guide to Travel Startups

You’re thinking of starting a travel startup. Congratulations! You’re joining the most competitive, saturated market in the startup universe, or as Y Combinator partner Garry Tan terms it, “the most common bad startup idea.” According to PhoCusWright, 750 travel startups have collectively raised $4.8bn in the last eight years (’05-’13, so that doesn’t even count AirBnb and Uber’s massive raises this year). But hundreds more have failed to raise funding and/or gain traction.

Don’t let that discourage you. There’s a reason we all keep trying to disrupt this multi trillion dollar industry: planning, booking, and making the most of travel could be improved in so many ways. The tools to try and create something new have never been so accessible. Gigantic funding and and a strong existing brand can actually stifle innovation.

T-Rex tries to chart exponential growth

Here’s a list of resources I’ve found valuable in the course of building my own travel startup, Hitlist, which might help you get further faster. I’ve tried to make this as comprehensive as possible, but it’s naturally informed by my own experience. Therefore the information below is most relevant to US-based startups working on technological innovation (as opposed to building a brand/lifestyle business). I’d LOVE feedback/edits – leave them in the comments or you can contact me on twitter @gillianim.

RESEARCH/RESOURCES:

PhoCusWright is the default industry body for research and analysis. Subscriptions and buying individual reports are out of most startups’ budget ranges, but there are useful tidbits online. See if you can make friends at more established companies that can share reports with you until you’re grown up enough to pay for your own.

Tnooz has long been the rag of choice for intra-industry gossip, analysis, and breaking news. With a distinguished list of contributors and an active community (as seen through the comments on most articles), it’s worth a daily read.

Skift plays in the same space as Tnooz, but is a few years younger (and has some ex-Tnooz writers on staff). They generally don’t feature outside writers but do have sponsored content. The newsletter is excellent and they’re entering the conference game with their own ‘Future of Travel Forum‘ in October.

In the VC space, General Catalyst and Thayer Ventures are well known for their focus on travel. Sequoia deserves special mention for, characteristically, getting into almost every major success in recent years (ITA, Kayak, AirBnb). Accel and Insight have also made a number of notable investments in the space.

Side note: as far as I can tell, the only woman represented on any of these lists – and the only woman I know of who has led any part of that $4.8bn invested in travel – is Sonali De Ryckr at Accel in London. Granted there are fewer women in venture capital in general, but they also seem to be disproportionately uninterested in travel investments.

CONFERENCES/EVENTS: this is not meant to be comprehensive – these are the conferences that fellow travel founders have found most value for money. H/t to David Litwak of Mozio, Alex Bainbridge of TourCMS, and Paige Brown of Dashbell for their insights.

PhoCusWright (various US locations, November, from $3499). The research company remains the indisputable king of the travel conference game. Its annual conference, held somewhere in the US, has historically attracted the who’s who of the travel ecosystem. The price tag is steep and so it’s important to go only if you have a clear agenda on what you’re hoping to get as your ROI from the three day event. There’s a smaller European edition in Dublin in May.

ITB (Berlin, March, 60 euro). Bring your walking shoes if you plan to go to this massive trade show. It’s very similar to World Travel Market, in London in November, but for some reason seems to attract more notable industry people. Expect lots of exhibition halls with every facet of the industry (from baggage handling systems to Disney tours) represented. A great opportunity to learn and network at any of the hundreds of coffee/cocktail hours. Hot tip: the LGBT pavilion has the happiest happy hours.

The inaugural Skift Global Forum (October, New York, ~$1200, with a much appreciated discount to $440 for startups) was a sell out smashing success: one commenter called it the ‘TED of Travel’. More intimate than the other conferences, and packed with good people to know.

Web In Travel (Singapore, late October, from $2000) the premier travel conference in Asia.

GBTA (various locations, July). The Global Business Travel Alliance holds a number of satellite conferences around the world but the annual Convention in July is the most effective for networking and BD.

Airline Information (various locations, main conference in December in New Orleans this year, from $599) geared towards airline ancillary revenue, cobranded credit cards and loyalty

Many of the major companies (Amadeus, Concur, Datalex, Sabre, etc) throw their own conferences which can be high value.

COMPETITIONS/PITCH EVENTS:

Hackathons can be an amazing way to connect with other people intent on building the next big thing in travel. Tnooz sponsors a few throughout the year, and Mashable and Emirates Airlines have also done travel-related events in the past

PhoCusWright’s Travel Innovation Summit offers an opportunity to present to the who’s who at the conference in November – but at a cost of $15k ($6k if you get a scholarship)

the Airline Information conferences have a ‘Lion’s Den’ which sounds like Shark Tank with less obnoxious judges

Web In Travel has a startup competition – would love more details from anyone who’s done it in the past

MEETUP GROUPS:

Travel Massive (various locations) is the most established meetup of travel industry folks. It’s a little different in every city (they’re active in more than a dozen, listed here) but tends to be heavier on bloggers/travel agents than on people involved in the technical side of the industry.

INCUBATORS/ACCELERATORS: if this is your first startup, you may want to consider one of these 3 to 6 month programs that typically provide seed funding, office space, mentorship, and an opportunity to present your company to investors at a ‘demo day’ in exchange for a nominal amount of equity (5-10%). The right accelerator can push your startup to achieve in 3 months what might take others 3 years.

Startup Chile (Santiago, Chile, 6 months, 2x/year) loves to fund travel startups, but typically doesn’t provide much value add. Unless you count a subsidized six months in Chile as a value add. On the upside, they don’t take any equity in the company.

RunUp Labs (Bloomington, Indiana, 3 months, 1x/year) the ‘first dedicated travel startup accelerator’ just had its first demo day on August 1st. Unclear where they’ll be going from here.

Traveltech Lab (London, no set term) offers free office space and opens January 2015. We’re excited to hear more about it – applications are open now.

BOOKING APIs: if you want to allow users to view live pricing on your site/in your app, you’ll want to either build or connect to an API that can provide live pricing and availability information. These can turn into revenue streams for your app in two ways: either you will act as a travel agency yourself, earning a commission off every ticket booked through your app, or you will send your traffic to a booking partner in exchange for a lower referral commission. Becoming a travel agency is much more involved: you will need to provide merchant services (customer service, insurance, etc). Depending on how well funded you are or how agile you want to be, it might make sense to refer to partners at least until you prove your business model.

Flights

Skyscanner has a robust, well documented API that is offered for free to select partners. You can try emailing them but networking your way to an introduction will be more useful.

Orbitz / Cheaptickets (same parent company) offer an affiliate API, but I’m not sure what kind of commission they provide.

Expedia, Priceline, Travelocity, and Kayak have all offered flight APIs in the past, but most won’t anymore unless you have a very strong ‘in’

Sabre, Travelport, Amadeus, and ITA all offer paid APIs, but you will need to provide end booking services or link to another partner if you want to make a commission.

NOTABLE TRAVEL STARTUPS: Diego Saez-Gil of WeHostels has compiled a great Quora post with the major exits in the travel space in the last decade or so. Some of the biggest travel startups (defined loosely as those that haven’t yet reached an ‘exit’ – either by IPO or acquisition) are listed below – I’ve tried to highlight all the ones that have raised over $10m, and also some notable up-and-comers. Douglas Quinby at PhoCusWright also issues a ‘State of Travel Startups’ report every year which is packed with interesting insights.

Metasearch engine (Kayak, Skyscanner) – aggregator of OTA content, drives warm leads to OTAs and direct to airline websites in exchange for a referral fee. The important distinction from an OTA is that you do not make your end booking on a metasearch engine. Metasearch engines make lower margins than OTAs but usually make up for it in volume.

IF YOU THINK THIS IS USEFUL please share it with your friends. And remember, as this GIF illustrates, if you can roll with the punches and move fast, you may be able to make the competition fall on its face.